Romania’s first fiscal package under prime minister Ilie Bolojan has drawn strong criticism from both employers’ organisations and trade unions, who argue that the new tax measures unfairly burden the private sector and risk worsening social inequality. The Concordia Employers’ Confederation and the Economic and Social Council (ESC) both issued negative opinions following consultations with the government, Startupcafe.ro reported on July 4.
“We categorically oppose tax increases and consider it deeply unfair that the private sector should pay again for the irresponsibility of governments in recent years,” said Dan Șucu, president of the Concordia Employers’ Confederation, after a meeting with prime minister Bolojan on July 4.
The fiscal package, approved by the government on July 4, includes an increase in the standard VAT rate from 19% to 21%, a rise in dividend taxation from 10% to 16%, and other measures designed to generate RON 10.7 billion (EUR 2.1 billion), or 0.56% of GDP, in deficit correction.
The ESC, a consultative body composed of union, employer, and government representatives, described the package as “unacceptable,” stating that it fails to meet basic principles of equity and progressivity. In its official opinion, the ESC warned that the measures will reduce citizens’ purchasing power and have negative social and economic consequences reminiscent of the austerity experienced in the early 2010s.
“The proposed measures are likely to deepen social inequalities, affect access to essential goods, and reduce the livelihood capacity of vulnerable households,” the ESC stated. “They can also have a socially destabilising effect and fuel social and political tensions in a context already marked by polarisation and institutional distrust.”
Şucu acknowledged that urgent correction of the budget deficit is necessary but criticised the government’s approach. “This should be done by reducing spending, not through new tax increases,” he said.
The consultation took place within the National Tripartite Council for Social Dialogue, a forum for employers, unions, and government officials.
Despite the negative feedback, the government moved ahead with the package, which will be adopted by assuming responsibility in Parliament without a vote.
iulian@romania-insider.com
(Photo source: Gov.ro)
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